IMF says Pakistan outlook 'favourable' but warns of risks

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The International Monetary Fund (IMF) said the outlook for Pakistan's economy was "favourable", citing Chinese infrastructure investments among reasons for growth, but warned of risks to recent progress.

Confidence in insurgency-hit Pakistan is growing, with the IMF saying last year that the country had emerged from crisis and stabilized its economy after completing a bailout programme.

However the IMF warned in a report on Friday that macroeconomic stability gains have started to erode and could pose risks to the economic outlook.

"Pakistan's outlook for economic growth is favourable, with real GDP estimated at 5.3 percent in ... 2016/17 and strengthening to 6 percent over the medium term on the back of stepped-up China Pakistan Economic Corridor investments, improved availability of energy, and growth-supporting structural reforms," the report said.

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Last year, Pakistan achieved the national goal of the growth target of 5.7 percent for 2016/2017, with domestic debt standing at $182 billion US dollars. The World Bank predicted 5.4 percent growth by 2018.

According to Friday's IMF report, Pakistan's current account deficit has widened and is expected at 3 percent of GDP in 2016-17 or more than 9 billion US dollars, driven by fast-rising imports of capital goods and energy.

It said Pakistan's foreign exchange reserves have declined in the context of a stable rupee-dollar exchange rate, urging Islamabad to allow greater exchange rate flexibility.

(With inputs from AFP and Reuters)

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